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Commodity prices just hit their lowest level of the 21st century.
The Bloomberg Commodity Index, which tracks the movement of 22 raw materials and their underlying futures contracts, tumbled 1.5% to 86.96 points this morning (Monday). The index hasn't sunk that low since Aug. 26, 1999, when it hit 86.30.
Here's how the index has trended from 1999 to now:
"Sentiment is extremely negative across the commodity complex," noted Mark Keenan, head of commodities research for Asia at Societe Generale SA in Singapore, in an e-mail to Bloomberg. "Markets are plagued by concerns of oversupply."
All commodity prices retreated today as investors panic over slowing demand in China. The world's second-largest economy and leading consumer of energy, grains, and metals saw the benchmark Shanghai Composite Index plummet 8.5% on the day. That's China's worst single-day stock market loss since 2007.
The current commodity price crash marks the first significant slump since the peak of the 2008 financial crisis. The commodity index fell nearly 60% during the last half of 2008. Prices have slowly been declining since they hit a post-recession peak in early 2011.
So what is best for investors to do?
Commodities will be volatile, so know your risk tolerance. But as we have always said, from crisis comes opportunity.
And despite oil's sharp decline, there are still ways to profit from the troubled commodity - if you know how to spot the healthy companies.
Alex McGuire is an associate editor for Money Morning who writes about commodity prices. Follow him on Twitter at @AlexMcGuire92 for the biggest commodity updates.
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